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BuyingApril 18, 2017

More than 4 million homeowners are paying too much for their mortgages

More than 4 million people are paying too
much for their mortgages by relying on standard variable rates. This is
according to L&C Mortgages, the UK’s largest fee-free mortgage broker.

Standard variable rates are typically
higher than other mortgage rates on the market, which means homeowners could be
overspending by an average of £216 a month, equivalent to nearly £2,600 a year.
If interest rates rise in the future, which the Bank of England has hinted is a
possibility, then homeowners could see their payment increase even further.

L&C examined a range of data to
establish the type of mortgage deals homeowners are on, how much they owe, and
the length of their mortgage terms. Using this information, they identified a
potentially better rate and worked out the monthly mortgage savings that could
be made.

David Hollingworth of L&C Mortgages
said: “Not only have we found that more than a third (36%) of homeowners are on
their bank or building society’s standard variable rate, but 3.4m people don’t
know their mortgage rate. They could potentially save hundreds or even
thousands of pounds a year by re-mortgaging to a new deal’’.

The research also looked regionally at how
much homeowners are paying on their mortgages. It found households in the
capital overspend by the most, typically paying £266 a month more than necessary.
Those in the North pay £201 more than needed, while households in the Midlands
and the south of England could save £222 a month if they were on a different
deal.

Worryingly, the research revealed that a
further 1.1m households are effectively throwing away a collective £2.78bn by
sitting on the wrong mortgage deal. The average pre-tax income for households
with a mortgage is £45,141, with households paying an average of £597 per
month. Over a third of homeowners said they can’t imagine a time not having to
pay their mortgage, yet over half of UK homeowners (58%) have never re-mortgaged
to save money.

David Hollingworth added: “A mortgage is likely to be
someone’s biggest monthly outgoing, and in only a few easy steps they could find
a better deal. It’s crucial that homeowners regularly review their mortgage, to
see how their rate stacks up against the record low rates that alternative
deals currently offer”.

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C R Child & Partners Ltd is an independent estate agent founded in 1929 which has gone from strength to strength in recent years and now boasts being one of Hythe’s leading estate agents covering Hythe and the whole of the southeast.